Economist Thomas DiLorenzo took Gordon’s view to task in this article, calling Gordon’s WSJ article “truly ridiculous.” DiLorenzo challenges Gordon’s historical narratives regarding Hamilton and Jefferson. In essence, DiLorenzo dismisses Gordon’s pro central banking ‘history’ as nothing more than statist propaganda.
Since Gordon’s article was published, the U.S. central bank, the Federal Reserve, has acted in unprecedented ways to, depending on your view, either A) save our economy from a horrible fate or B) expand its political and economic power while enriching the elite at the expense of the rest and creating a slew of future problems.
Economist Robert Higgs votes for B in this article. Higgs takes the opportunity to fisk Fed Chairman Ben Bernanke’s preemptory article aimed at stanching congressional criticism during his upcoming confirmation hearing for a second term.
Higgs’ article is worth reading. Not to be missed is the link to this Huffington Post investigative article exposing the Fed’s shady practices of hiring those that are supposed to be acting as the Fed’s gatekeepers. It’s a classic example of the foxes guarding the henhouse.
Lest Higgs be misunderstood, he makes clear in a comment what he believes should come of the Fed and of central banking in general. “I favor the Fed’s abolition and, moreover, the complete separation of government and money. (And that’s just to get off to a good start.)”
Economist Friedrich Hayek strongly favored abolishing the government monopoly over money. He wrote extensively about the deep history of mischief of governments’ involvement in money. For example, in his book The Fatal Conceit, he writes (pp. 103-104)
“The history of government management of money has, except for a few short happy periods, been one of incessant fraud and deception. In this respect, governments have proved far more immoral than any private agency supplying distinct kinds of money in competition possibly could have been.”Governments have been very successful in guarding their monopoly over money. The concept that government should not be involved in the money supply except as even-handed rule maker and referee would be an extremely alien thought to most people. If they thought of it at all, most would react with fear and revulsion. Never mind the fact that markets handle with relative efficiency much of what is commonly substituted for actual money.
The libertarian Republican Congressman Ron Paul is an outlier in Congress. (The political mainstream regards him much like the crazy aunt in the attic.) Only people in certain fringe categories take his book End the Fed seriously. But after years of trying, he has finally succeeded in getting serious consideration for his bill that would require the Fed to be audited. The Fed and its allies are pulling out all the stops to stymie the bill or at least strip it of any effectiveness.
Despite the pro-Fed narratives, central banking has not served our nation well. Ending the government monopoly on money would be a good step. (Statists will put up all kinds of reasons why this would cause the end of the world.) But it seems that no matter how badly our central bank behaves in this regard, we’re going to insist on it continuing in this role.
Since the Fed has shown itself to be a heavily politicized organization, the very least we can do is to bring it under the control of Congress, audit it, and let some sunlight into its currently obscured operations. No, that won’t solve the problems with our government’s involvement in the money supply. But perhaps it will at least give people a better idea of how the Fed impacts their daily lives.